Tag Archives: debt and deficits

Posted onApril 8, 2015byJoe Firestone|Comments Off on When Will the Senate Budget Committee Majority Ever Learn About Sector Financial Balances?

By Joe Firestone

There are two words that describe the Republicans’ Senate Budget Committee’s proposed budget: “dishonesty” and “austerity” for most Americans. Let’s deal with the dishonesty part first. In due course, the austerity will be apparent.

The Senate Budget Committee’s statement, entitled “A Balanced Budget That Supports Economic Growth and Expands Opportunity for Hardworking Americans,” claims to support stronger economic growth, and provide greater opportunity. We might well ask “how much growth” “growth for whom” and “opportunity for whom?”

Certainly not for me and thee, since the Senate budget projects substantially decreased Federal outlays over the decade 2016 – 2025, compared to the CBO baseline budget. This decreased Federal spending comes from:

Posted onApril 6, 2015byJoe Firestone|Comments Off on When Will the Congressional Progressive Caucus Ever Learn About Sector Financial Balances?

In addition to the House Budget Committee and OMB budget plans and 2016 – 2025 projections fiscal policy followers have also recently been graced with the effort of the Congressional Progressive Caucus (CPC) proposing their budget plan and 2016 – 2025 projections. The CPC budget proposal is interesting because it is definitely not intended to be an austerity budget. Instead, its authors consciously try both to achieve the goals of “fiscally responsible” low deficit budgets while turning away from austerity and towards achieving full employment, renewed economic growth, economic stability, a strengthened social safety net, greater economic equality, an improved infrastructure, and transportation system, improving the health insurance system beyond the Affordable Care Act, a greener economy, improved education and other progressive goals.

In my last post I asked this same question about the House Budget Committee. As my readers saw in that one, the attempts at deficit reduction leading to budget balance were so severe that they implied that if the House budget were followed, and if the economy did not collapse before the decade projection period ended due to a collapse of aggregate demand, then private sector deficits would be produced in every year from 2017 – 2025. In addition, since the budget provided for severe cuts to federal spending designed to benefit poor people and the middle class, it was likely that the private losses from this budget would be concentrated on the people who can least well absorb them.

Posted onMarch 30, 2015byJoe Firestone|Comments Off on When Will CBO and the House Budget Committee Ever Learn About Sector Financial Balances?

It never ceases to amaze me that those who offer budget plans and projections never take into account the reality that their projections must be consistent with implications of trends in sector financial balances for their projections. This is a simple lesson that those playing the fiscal responsibility game never seem to learn. Certainly this is true of the Republican House Budget Committee, as we’ll see.

Today, I received an e-mail from the Friends of (the very popular with progressives) Senator Bernie Sanders. In it the Senator says:

I’m joining with the members of Progressives United to send a clear message to President Obama that we will stand with him when he vetoes Republican legislation that attacks the well-being of the struggling middle class.

Join me and members of Progressives United to urge the president to VETO any Republican legislation that attacks working families.

NO to cuts in Social Security. NO to cuts in Medicaid. NO to converting Medicare into a voucher program. NO to new trade legislation that sends our jobs overseas and hammers our middle-class workers. NO to cuts to nutrition programs, education or environmental protection.

We already know what “compromise” will mean from a Republican Congress: their way or the highway. In order to win in the future, President Obama must stand strong for the American middle class, and we must support him.

Tell President Obama: Standing firm is the only option, and that means committing to VETO legislation that attacks working families, and fighting for legislation that defends their needs.

Let’s get this out of the way. I agree with Piketty’s overall conclusion in Capital about inequality, that: the distribution of wealth in many industrial nations is highly unequal, wealth concentration has been increasing; and there is a high likelihood that the extent of wealth inequality will continue to grow unless appropriate fiscal policy is used to reverse current trends. However, I don’t agree with:

— the framework he uses to define and specify “capital”;

— the way he looks at Government finance and net worth; and

— the fiscal policy proposals he offers to reduce Inequality and put a stop to current trends of growth in the capital to income ratio.

Before the “no” vote on Scotland’s independence, The New York Times, carried a post by Neil Irwin in the Upshot making the point that the then upcoming vote “shows a global crisis of the elites.” He argues that the independence drive reflects “. . . a conviction — one not ungrounded in reality — that the British ruling class has blundered through the last couple of decades.” He also thinks that this applies to the Eurozone and the United States to varying degrees, and is “. . . a defining feature of our time.”

Irwin then updated his first post last night, expanding it and recognizing the victory of the “no” votes in the referendum. His new post did not add anything essential to his “global crisis of the elites” diagnosis, so the references and quotations below come solely from his pre-vote post. But the points made apply equally well to his update.

To summarize his argument, for decades now, the elites in major modern, industrial nations have committed leadership blunders and created great discontent among the citizens of their nations, to the point where their polices have contributed to damaging their economies seriously, and the rise of popular resistance embodied in extremist parties and independence movements. Elites have had vast power, but have not lived up to their responsibilities to serve the people of their nations. Discontent with their actions and results is so high that many are questioning the legitimacy of the very governing institutions that claim to serve them, and are exhibiting a greater and greater willingness to do something about these institutions and the policies that they and the elites are generating. Scotland is but one example of that, and his implication is that more examples are in the offing.

It’s significant, some might say even remarkable, that Irwin’s article appeared in The New York Times, since it is a flat out criticism of elite leadership over a number of decades and a warning to elites to improve their performance or deal with the consequences. But I think it still misses the most important question. That question is whether there is a global crisis of elites or a global crisis of democracies? I’m afraid I think that the crisis of elite leadership is only a symptom of the underlying cause of a broader global crisis of democracy. Continue reading →

I’m interrupting my series on US Government Real Fiscal Responsibility since the Carter Administration to write about something Chris Hayes said relating to Real Fiscal Responsibility. Back in February of 2014, he tweeted:

“If you can run a deficit to go to war, you can run a deficit to take care of veterans.” – @chrislhayes#inners

Recently, that tweet along with an image has been making the rounds on Facebook as an Alternet photo. The sound bite in the tweet looks great, after the manner of a logical truism.

But, logically, it doesn’t follow, because one can easily say that as long as the Government implicit in the statement isn’t a currency issuer, but a currency user who must acquire its funds by taxing or borrowing alone, that Government can involuntarily run out of funds. And it is conceivable that funds might be raised to fund a war, while that same Government might not have the funds available to take care of the people who fought for the nation, without defaulting on its obligations. Continue reading →

This, the fifth post in a series evaluating the fiscal responsibility/irresponsibility of the Governments of the United States (mostly the Congress, the Executive Branch, and the Federal Reserve) by Administration periods, beginning in 1977 to 1981 with the Jimmy Carter period, will cover the performance of the Government on the environment and climate change aspect of “public purpose.” Posts 1,2,3, and 4, discussed some basic definitions and assumptions of the series and evaluated Government performance relating to economic stagnation, living wage full employment, price stability/inflation, implementing universal health care, and educational reform.

I’ve explained why fiscal responsibility is closely connected to the idea of public purpose, in this post prior to beginning the series. You’ll want to read it, if you want to know what I mean by “public purpose,” and see what else that pregnant term includes, apart from enhancing the environment.

If you’re reading this you’ve landed near but not at the beginning of my very lengthy series evaluating the fiscal responsibility/irresponsibility of the Governments of the United States (mostly the Congress, the Executive Branch, and the Federal Reserve) by Administration periods, beginning in 1977 – 1981 with the Jimmy Carter period. My first post explained why I chose to start my evaluation with the Carter period, and also laid out my related definitions of fiscal sustainability, and fiscal responsibility.

It explained why fiscal responsibility is closely connected to the idea of public purpose, which I laid out in this post prior to beginning the series. You may want to consult that post, if you want to know what I mean by “public purpose.” I also claimed that the Government of the United States has been fiscally irresponsible in every Administration period since 1977.